Turkey’s Treasury and Finance Minister Mehmet Şimşek has denied allegations of a “crisis” between him and President Recep Tayyip Erdoğan regarding the tight monetary policy implemented after the general elections of 2023, contributing to the ruling AKP’s setback in the local elections, according to his X post and an announcement posted to the Presidency’s “Center for Countering Disinformation” website.
Simsek has made several announcements and comments over the recent days, trying to convince investors that Turkey will stick to orthodox economic policy with the full support of President Erdogan. President Erdogan reaffirmed his faith in Simsek-orchestrated austerity program, dubbed “Medium Term Economic Program” in Turkish political lingo, as part of his speech after the weekly Cabinet meeting on Tuesday night.
While the chorus of loyalty to orthodox economic policies and commitment to combat inflation are encouraging, the authorities are yet to lay out a concrete plan how to achieve results.
Mehmet Şimşek, Turkey’s Treasury and Finance Minister, on April 16 denied allegations of a “crisis” between him and President Recep Tayyip Erdoğan about the tight monetary policy that cost the ruling Justice and Development Party (AKP) the local elections, according to some commentators.
Şimşek posted a response on his social media account, claiming that news about a crisis were fabricated to create a false narrative about the government.
The minister ensured that Erdoğan has fully supported the monetary policy since its implementation in 2023, after the general elections of May.
“We are determined to decrease inflation, finance our current deficit, establish budgetary discipline, and resolve structural problems,” wrote Şimşek.
The Center for Countering Disinformation of the Turkish Presidential Communications Directorate also issued a statement regarding the crisis claims.
Dovish view on monetary policy
Mehmet Simsek said the central bank thinks its monetary policy is tight enough amid a worse-than-expected inflation print that prompted global banks to predict a more restrictive monetary policy.
“We think we have done enough, the central bank thinks,” Simsek said on Tuesday, discussing monetary policy at a public-private partnership conference in Istanbul. “We have to be patient and committed going forward.”
Authorities are planning additional selective credit tightening and quantitative tightening steps, according to the minister, who said Turkey is in “a transition period.”
Anticipates Surge in Foreign Investments Post-Election
Simsek has the habit of making peace-meal policy announcements through his X-account, which is not the best communication strategy, but for what it’s worth, he expects large inflows of foreign financial investment, which would indeed reduce the need for further monetary tightening:
Türkiye expects a substantial increase in international investments, notably in mergers and acquisitions, after the upcoming March 31 elections.
Turkish Treasury and Finance Minister Mehmet Simsek has anticipated a substantial surge in foreign investments and capital flow into the country in the aftermath of the upcoming local elections, slated for March 31, according to aawsat.com website.
Asserting that Türkiye currently stands near the lowest volatility range of exchange rates among developing nations, Simsek underscored on Saturday in statements to the press the importance of maintaining macroeconomic stability, particularly price stability, as a key strategy to bolster long-term growth potential.
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